Outpatient Hospital Building

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1008-DR
ApplicantLos Angeles County University of Southern California Medical Center
Appeal TypeSecond
PA ID#037-91033-00
PW ID#10922
Date Signed2010-02-17T05:00:00

Citation:          FEMA-1008-DR-CA, Los Angeles County University of Southern California

Medical Center, Outpatient Hospital Building, Damage Survey Report (DSR) 10922

 

Cross-

Reference:      Grant Acceleration Program

 

 

Summary:      Following the January 17, 1994 Northridge earthquake, the Los Angeles County University of Southern California Medical Center (Applicant) accepted a Public Assistance Grant Acceleration Program (GAP) offer to repair its outpatient hospital building.  FEMA funded final eligible costs at closeout under DSR 10922.  On

February 19, 2008, the Applicant appealed FEMA’s determination that $59,301 in costs for Architecture and Engineering (A&E) construction administration services are project management costs.  The Applicant argued that FEMA mischaracterized the expenses as project management part H costs when the costs were directly related to construction design and engineering services (part A).  To support its appeal, the Applicant submitted excerpts from the Instructional Guide for Cost Estimating Format (CEF), a copy of the A&E Services Agreement and a Subgrantee Summary of Expenditures, A&E Construction Administration.  FEMA denied the first appeal on July 29, 2008, because, consistent with the GAP guidelines and the documentation submitted, the costs associated with construction administration services is a project management part H cost, not a part A cost.  On August 29, 2008, the Applicant filed its second appeal, maintaining the $59,301 cost should not be categorized as project management part H costs, but treated as part A.

 

Issue:              Is the $59,301 in construction administration services a part A cost and therefore,

is the resulting $68,789 eligible for offset with GAP under-run funds?

 

Finding:          No.

 

Rationale:       Title 44 Code of Federal Regulations §206.206(a); Instructional Guide for Cost

                        Estimating Format (CEF)

Appeal Letter

February 17, 2010

 

Frank McCarton
Governor’s Authorized Representative
California Emergency Management Agency
Response and Recovery Division
3650 Schriever Avenue
Mather, California 95655

Re:  Second Appeal–Los Angeles County University of Southern California Medical Center
        PA ID 037-91033-00, Outpatient Hospital Building, FEMA-1008-DR-CA,
        Damage Survey Report (DSR) 10922
 
Dear Mr. McCarton:

This is in response to your letter dated October 29, 2008, which transmitted the referenced second appeal on behalf of the Los Angeles County University of Southern California Medical
Center (Applicant).  The Applicant is requesting that the Department of Homeland Security’s
Federal Emergency Management Agency (FEMA) reconsider its designation of construction administration costs for its outpatient hospital building as project management costs.

Following the Northridge earthquake on January 17, 1994, the Applicant accepted Grant Acceleration Program (GAP) funds to repair the facility.  In accordance with GAP guidelines, FEMA determined at project closeout that $59,301 in architectural and engineering (A&E) construction administration costs constituted project management costs.  The Applicant appealed FEMA’s determination on February 19, 2008.  The Applicant argued that FEMA mischaracterized these costs as project management costs when the costs were directly related to construction design and engineering services (part A costs).  The total amount in dispute is $68,789 ($59,301 in part A costs plus $9,488, the 16 percent allowance for project management costs attributable to the increase in part A costs) that could be offset by underruns from another eligible GAP project.  The Deputy Regional Administrator sustained this decision on first appeal in a letter dated July 29, 2008.

The Applicant submitted its second appeal on August 29, 2008.  The Applicant maintained that the $68,789 in costs should not be categorized as project management costs, but treated as eligible part A costs associated with the design and engineering of the project.  The Applicant included a copy of the A&E Services Agreement and a Subgrantee Summary of Expenditures, A&E Construction Administration.  The summary of expenditures lists categories of work with corresponding vendor names, job invoice numbers and service fees.  However, the Applicant did not provide vendor invoices that identify the specific A&E services performed and the fees associated with those services to support its claim.

The approved GAP funding for the University of Southern California Medical Center contained a limit on project management costs (soft costs).  In 1999, FEMA approved construction administration as a project management cost in the GAP settlement offer pursuant to the Northridge GAP Cost Estimating Format (CEF) Guide.  In 2000, FEMA and Los Angeles County agreed to caps on the County’s claims for project management costs because FEMA determined the County’s initial claims for project management costs were excessive.  FEMA did not place caps on construction costs (hard costs).  For the University of Southern California Medical Center project, the Applicant exceeded the approved project management costs and claimed construction administration costs as hard costs at closeout.  However, the Applicant did not submit a description of the specific tasks performed under the A&E construction administration that would justify their treatment as hard costs.  In absence of documentation that the construction administration costs were hard costs, it is appropriate, and consistent with the GAP CEF Guide, to treat these costs as project management costs.  It is also appropriate to address these costs during closeout in the same manner they were treated in the GAP settlement offer.  Therefore, FEMA considers the $59,301 in construction administration costs to be excess project management costs.  These costs are not eligible for reimbursement.

I have reviewed all information submitted with the second appeal and have determined that questioned costs are appropriately characterized as project management costs pursuant to GAP guidelines and the documentation submitted.  Therefore, I am denying the second appeal.
Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.

Sincerely,
/s/
Elizabeth A. Zimmerman                          
Assistant Administrator                                                                    
Disaster Assistance Directorate                                                                    
cc:  Nancy Ward
       Regional Administrator
       FEMA Region IX

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